I had inventory that cost $1750 at the end of last year. I decided to close the business and filed paperwork with the state. Can I take all $1750 as a loss? Or since the inventory is still there (I don't plan on selling that to anyone), should I say the inventory at the end of the year is the same as the beginning of the year - thus not getting the benefit of the loss on my taxes?
don't know what's there but the general viewpoint of the IRS is unless you scrap the items they are considered converted to personal use and thus no write-off is allowed.
I'd be glad to scrap it or give it away - the point is that I will not make any money off the inventory. Would that allow me to take the loss? As I mentioned before, I have closed the business and would like to writeoff this inventory. Thank you for your help.
As Champ Mike9241 said above, the IRS considers this inventory converted to personal use, with no write-off.
If you had a "Beginning of Year Inventory" that was more than zero, then you must indicate that your business had an inventory. You can then indicate that all of that inventory was "removed for personal use". That reduces your inventory to zero. (Which is required when closing the business.)
If you choose to donate the remaining inventory, then you report a "personal donation" under the Deductions and Credits tab in the Charitable Donations section. You can do this next year if you didn't donate the inventory in the year you closed your business.
Per IRS Pub 334 Donation of inventory. If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the smaller of its fair market value on the day you contributed it or its basis. The basis of donated inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. You must remove the amount of your contribution deduction from your opening inventory. It is not part of the cost of goods sold.